Electricity consumers may soon face another major financial challenge as the Govt Plans to increase power tariffs to manage the country’s growing circular debt. The move comes as officials finalize the Circular Debt Management Plan 2025–26, which outlines urgent steps to stabilize the struggling power sector.
According to a document shared by Samaa TV, Pakistan’s circular debt has reached worrying levels. It stood at Rs1,614 billion last fiscal year and is now expected to rise to Rs2,348 billion. This increase of Rs734 billion highlights the severity of the crisis. Experts say poor recovery rates and high production costs are the main reasons behind the rising debt.
Sources confirm that the Govt Plans have been shared with the IMF, assuring them that tariff hikes are unavoidable. The plan also focuses on achieving zero flow of circular debt in the coming years. Officials believe this target is necessary to improve financial discipline and reduce dependence on government subsidies.
The document mentions several cost-cutting strategies. It states that expensive power plants will be shut down to reduce generation costs. Cheaper energy sources will be prioritized to make electricity more affordable in the long run. The plan also directs power distribution companies to cut losses by improving efficiency and reducing theft.
Another key step is the strict recovery of outstanding dues from K-Electric and Gencos. These recoveries are seen as essential to stop financial leakages that have burdened the sector for years.
Despite these measures, the Govt Plans warn that consumers must “be prepared to bear the new burden.” This suggests that tariff increases are almost certain. Officials say the adjustments are necessary for Pakistan to meet IMF requirements and restore stability to the collapsing power sector.
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As the implementation date approaches, many households and businesses are anxious about the impact of higher electricity bills. For now, the government remains focused on pushing forward with reforms that it believes are crucial for long-term energy security.
